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The World Trade Organization and The Global Economic Crisis

Speaker: Pascal Lamy, Director-General, World Trade Organization
Presider: Gail D. Fosler, President, GailFosler Group LLC
June 24, 2010

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Speaking at the Council on Foreign Relations on June 24, Pascal Lamy, director-general of the World Trade Organization, discussed the difficulties surrounding trade policy amid a global economic crisis. Despite fears that the crisis would lead to widespread protectionism, he said it didn't happen in part because sixty years of negotiations had brought about an international trade system that was more interdependent and stable.

Globally, "the culture of interdependence is better" than what it was twenty or thirty years ago, he said. However, he conceded trade politics remains a difficult topic for many countries to address both internationally and domestically. New trade deals inevitably reshuffle competitive positions, which can be politically painful, Lamy said. He said that relations often rebalance over time, noting the concerns over the U.S.-Japan trade relationship in the 1970s and '80s versus today. On whether the troubled Doha round of trade talks was dead, he said international negotiations never die, "they just get a bit longer."

Ahead of the G20 summit, Lamy cautioned criticizing the group too much for inaction. The G20 countries do not constitute a world government, he said, but a body meant to try to find commonality and a sense of direction. He said the best benefit of the G20 was the forum it provided for leaders to explain their policies to one another.

Lamy was extremely cautious when discussing China's decision to end the yuan's peg to the U.S. dollar ahead of the G20 meeting--seen by some analysts as a move to stave off a trade dispute with United States and other members. He called the move "politically significant" and said the debate in China on the issue is "quite tense." He said addressing domestic demand and savings would have a more significant impact on trade imbalances.

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